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Baubles, bangles and watchbands of 316L stainless?

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Fashion-conscious individuals looking to sport the latest and greatest on the jewelry scene might be in for a surprise. The jewelry industry, a mainstay for precious metals, is seeing a push toward substitution amid soaring prices for gold and platinum.

Precision Specialty Metals Inc., Los Angeles, which processes stainless steel and other non-precious metals for a variety of industries, is looking into selling its products into the jewelry and watchmaking markets. "They make things that seem to be what the jewelry world is looking for," said Cathy M. Lyttle, vice president of corporate communications at parent company Worthington Industries Inc., Columbus, Ohio.

Precision Specialty Metals produces the Type 316L stainless that is frequently used to make watchbands and a variety of other jewelry items. The company is looking to boost its volume of business in the market in anticipation that some jewelry makers might begin working more with stainless, titanium and other less-expensive materials as precious metal costs continue to increase, Lyttle said.

"We've heard it's heading in that direction and we recognize it's an opportunity," she said. "We're looking to see if that possibility exists out there with our customers." Lyttle declined to quantify how much market share the company hopes to gain, but said a sale is a sale. "I'm not saying it's a stampede, but it's becoming more popular," she said.

Likewise, Mark Danks, sales and market manager at platinum and palladium producer Johnson Matthey NY, said he's heard anecdotal evidence that stainless and titanium will find more of a role in jewelry designs. "Certainly, that's what we're hearing," he said. "Our customers that make jewelry with those metals are saying that. Especially for a man's band or something, it's really attractive."

But Johnson Matthey itself refines only platinum and palladium and couldn't offer solid evidence of the trend. Danks, however, said he has seen a difference lately in the buying habits of his customers platinum sales remain strong at the top end but are tight in the middle to low-end of the business.

"The high end continues to buy because people can afford to buy the metal," he said. "But as with everything else in the economy, the mid-range (jewelry) manufacturers are having difficulty selling to retailers because they just aren't selling. People are putting their money into other things, like filling up their car with gas or buying an iPod."

The high-end business remains strong because of long-standing tradition, Danks said. "When you buy an engagement ring, people think of diamond and platinum together," he said. "The bridal market is still strong."

Uyemura USA, an Ontario, Calif.-based division of Uyemura International Corp. that manufactures metallic finishes for jewelry and other industrial uses, is seeing a similar trend.

"We don't see many people moving from gold at this point," said Don Walsh, Uyemura USA's director of operations. "Where we do see a change, because rhodium is so expensive there is a movement out of that."

Rhodium is the whitest, brightest and hardest material for traditional jewelry, so for that reason it traditionally has been used as a setting for a diamond to reflect the light back up through the stone. But rhodium, which was around $1,000 an ounce in July 2004, is now hovering close to the $10,000-an-ounce mark, according to AMM data based on Johnson Matthey prices.

"Everybody is looking for what else is bright—platinum and palladium," Walsh said. While he has no sense as to whether demand for stainless, titanium and other alternatives in jewelry applications will grow, he added that even if they do it probably won't be for long.

"I've seen it for all the metals over the years—when prices fluctuate, they switch back," he said.

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